Top 3 Ways to Invest in Gold and Silver | Commodities|Exchange ...

Top 3 Ways to Invest in Gold and Silver

Mining Stocks

One of the most lucrative ways to profit from a precious metals commodity bull market like the one we are currently experiencing is to buy shares in the companies that mine gold and silver. As in any investment opportunity, take the time to analyze the fundamentals of those mining companies that hold promise for your investment portfolio.

Look for miners with a track record of profitability over a five to seven year period as evidenced by consistent growth rates in excess of 10 percent for Return On Investment Capital (ROIC), Book Value Per Share (BVPS), Earnings Per Share (EPS), Sales and Free Cash Flow. Those miners that show consistent growth over long periods of time are more likely to continue to be profitable for the shareholders.

To build a balanced portfolio, focus on mining companies with low-cost production, diversification, solid fundamentals and include a couple of dividend-paying majors. Here?s an example of a balanced precious metal stock portfolio that blends major producers with mid-tier / junior producers:

Goldcorp
Newmont
IAMGOLD
Yamana
Royal Gold

Exchange-Traded Funds (ETFs)

An ETF is an investment vehicle that combines the features of traditional mutual funds and individual stocks. These open-ended funds trade like stocks that can be bought and sold on a stock exchange. Precious metal ETFs are designed to track the price of gold or silver, less the storage and administration costs. They are backed, in many cases by physical allocated metal.

The main advantage is that you, the retail investor, as well as large institutions such as pension funds, now have access to investing directly in gold and silver by owning shares, which are both liquid and economical. You also enjoy the protection offered by a regulated financial institution.

The downside is that some funds are not backed by the physical allocation of gold or silver. Before investing in any ETF, ensure that you understand what the investment vehicle is actually promising to deliver. Does the ETF actually track the price of the precious metal or is it based on an investment ?similar? to and investment in that metal? To find out, check out online the disclosure statements filed with the Security Exchange Commission.

Three of the largest physical gold-backed exchange-traded funds are:

Ishares Comex
SPDR Gold Shares
GBS UK

Gold & Silver Bullion/ Coins

Owning physical gold and silver makes the investment very private and outside of the financial system. Having physical precious metals in your possession gives you that added assurance against catastrophic situations, such as a complete collapse of the financial system.

The downside of owning physical gold or silver is that you need a safe storage facility and insurance protection, whether it is stored at home or abroad.

Your best bet is to purchase the most recognizable forms of gold or silver such as 1-ounce U.S. Gold Eagles or 100-ounce bars of 0.999 fine silver. Take the time to find a trustworthy local dealer that provides you with both advice and great service.? Alternatively, you can check out these online bullion dealers who may meet your needs:

BorderGold.com
Kitco.com

Having one or a combination of these three investment vehicles will provide you with some exposure to the precious metals industry. It is now up to you to decide which vehicle is the most appropriate.

How could you build your investment portfolio with greater confidence and ease?

Learn some additional tips that will teach you how to become a more consistent and successful investor. Visit Stock Investing Simplified.
Empowering you to be a better investor through education.

Source: http://commodities-etf.com/?p=176

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